Automatically identify intercompany exceptions and underlying transactions causing out-of-balances with rules-based solutions to resolve discrepancies quickly. Nowadays, it’s typical for accounting departments to utilise various types of specialised software. However, these systems are often siloed, hampering the speedy process of closing books. Creating a month-end process checklist lays down all the necessary tasks to complete, including the point person for each job.

Before we talk about its best practices, it is essential to identify and mitigate the challenges involved in completing the month-end closing process accurately and quickly. Let’s look at some of the common roadblocks businesses face during the month-end close and their solutions. Refocus your teams on analysis by replacing repetitive, spreadsheet-heavy work with leading-practice automation. Centralize data and close activities, automate journal entries and reconciliations, strengthen controls, and enhance visibility. To respond and lead amid supply chain challenges demands on accounting teams in manufacturing companies are higher than ever.

What is an Accounting Review?

By using up-to-date information, you will be able to quickly identify any issues that may arise during the month-end close. This data can then be used to correct any mistakes that surface during the process. For example, if an error occurs when preparing the income statement, the finance team can use the latest information to determine which line item caused the issue. One of the biggest roadblocks is the slow manual processes involved in data collection. Finance teams end up spending a considerable amount of time collecting and consolidating data from a variety of tools to then input that information into spreadsheets.

While most accounting teams prepare their entries at the end of an accounting period, they may be prepared whenever an accountant deems appropriate. It’s important to also note that the month-end closing process is known to be a slow and manual-intensive practice. Automation reduces or eliminates bookkeeping for startups the need for manual data entry, preventing errors before they happen and ensuring data is clean for analysis and reporting purposes. Rather than spending time creating or updating yet another spreadsheet, your team can devote their efforts to higher-value-add activities within the organization.

Use continuous accounting practices

Financial statements help the business owner understand how the business is doing. If a business has to prepare its annual reports on time, it must prioritize the monthly financial close process. If you are one of those who worry about carrying out the close process, this guide is for you. You can prepare a month end close checklist based on the steps given. Follow this checklist, and the close process every month will no longer be troublesome.

The interdependent nature of the process is part of what makes it so complex. For this reason, it can be helpful to articulate in writing the main components of your closing process, important deadlines https://marketresearchtelecast.com/financial-planning-for-startups-how-accounting-services-can-help-new-ventures/292538/ and who is responsible for each step. Using modern accounting software that integrates deeply with your ERP or financial management system can substantially improve the month end close process.

Repetitive Tasks That You Can Automate in Your Month-End Close Process

While variation in the month-end close timeline is inevitable given differences in operational resources and business complexity, the difference between five and ten days is significant. Imagine being given five additional days each month—60 days a year! This might mean more time for forecasting and analysis or the ability to implement new software and improve team communications. Or perhaps your whole team is currently working overtime each month to get the books closed—in which case that extra five days would result in a happier, better rested and more engaged workforce. The goal of the month-end close process is to give businesses a clear view into how your organization performed that month.